18 Jul PSCs Are Keeping an Eye on New York

Since the late 1990’s, ESCOs in the state of New York have provided competitive energy choices to residents. There have not been many radical changes to the energy choice market since. However, five months ago, New York Energy Marketers experienced a rude awakening to drastic, new regulations that were put into effect. Operating in New York state now comes with new rules, including:

The Commission has the ability to audit all ESCOs in the state.

NYPSC has strengthened its abilities to revoke ESCO eligibility for doing business in the state.

New ESCO contracts with residential or small commercial customers will not take effect unless they provide guaranteed cost savings or at least 30 percent of the supply comes from renewable energy.

CEOs, or designated officers, of each ESCO in the state will be required to submit a statement affirming that the company is in compliance with the new rules.

ESCOs serving consumers via month-to-month variable rate contracts must enroll those customers in a compliant product by the end of the current billing cycle or return them to utility supply services.

The legality of these major changes currently are being challenged. While marketers in New York have cause to be concerned, marketers that operate in other states also should be vigilant. The Public Service Commissions in other competitive states are keeping a close eye on the outcome of the regulatory changes in New York. Several states in the Northeast and across other markets in the US are scrutinizing how effective these new regulations will be and if all sweeping changes will be upheld in court.

If the state of New York is successful in upholding the legality of the new regulations, other states may begin taking action to further reform their own regulatory systems. The impact of New York’s regulations will vary by state and will impact energy marketers in a myriad of ways. Some potential impacts are:

ESCOs could see more stringent record keeping requirements, including financials, customer communications and other files being made available to commissions for audits.

PSCs could implement similar new account requirements in order to guarantee customers savings and/or include a greater portion of renewable energy in the mix.

Those ESCOs New York has deemed to be “bad actors,” may have their applications denied or may come under greater scrutiny by the other states in which they operate.

Obviously, these regulatory changes have the potential to significantly impact marketers. The good news is that it does not appear these changes will be happening anytime in the near future. The next New York PSC meeting is in late July, and they are expected to lay out several new orders. These new orders should be the PSC’s response to the comments provided to them in the public response period. It remains to be seen how quickly these orders will be implemented or resolved.

Regardless, most states will not see significant changes coming into play overnight. Even if the NYPSC is successful in defending its newly laid out regulation changes, other state commissions will need considerable time to develop and implement their own regulatory reforms.

While marketers can sense seismic shifts rippling from this New York case, two things can be done to be prepared:

Watch – Follow this current legal case closely. Also, note how ESCOS in NY are publicly responding, and monitor the actions and announcements of the PSC in your own state.

Lead – Be proactive in engaging with your PSC. What better way to stay abreast of any changes than to get the information straight from the source?

While some marketers in New York may have been caught off guard, to ensure your business’ success, keep your eyes open and be vigilant. Many ESCOs have weighed their opinions on how the industry can better itself in New York. For those ESCOs outside of New York, do the same within your own states. By being proactive, you will be better prepared to help your company weather whatever regulatory changes happen in the future.